This is an update to our previous post regarding Assembly Bill 5 (AB5), signed into law by the office of California Governor Gavin Newsom on September 18, 2019.
On September 11, 2019, the California Legislature passed Assembly Bill 5, also known as AB5, on a vote of 56-15. Just seven days later, on September 18th, California Governor Gavin Newsom signed AB5 into law.
What is AB5? AB5, introduced by Assemblywoman Lorena Gonzalez in January, is the legislature’s response to the California Supreme Court's opinion in Dynamex v. Superior Court (Dynamex). The bill entirely redefines the standard for determining whether a person providing labor or services for compensation may be classified as an independent contractor rather than an employee.
What’s Next? Hundreds of thousands of workers across the state including Uber and Lyft drivers; DoorDash, Uber Eats, Instacart and Postmates couriers; Amazon Flex drivers; taxi drivers; translators; medical professionals; franchise owners and many more, may need to be re-classified as employees instead of independent contractors after the law takes effect in 2020. The law is also expected to set a new precedent across the country.
In light of AB5, businesses that need to maintain or establish independent contractor relationships with workers in California should seek legal counsel to determine whether those workers can be validly classified as independent contractors.